Trade-Ideas: Veeco Instruments (VECO) Is Today's Strong On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Veeco Instruments ( VECO) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Veeco Instruments as such a stock due to the following factors:

  • VECO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.4 million.
  • VECO has traded 86,675 shares today.
  • VECO is trading at 11.30 times the normal volume for the stock at this time of day.
  • VECO is trading at a new high 12.14% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on VECO:

Veeco Instruments Inc., together with its subsidiaries, designs, manufactures, and markets thin film equipment to make light emitting diodes, power electronics, wireless devices, hard disk drives, and semiconductors worldwide. Currently there are 6 analysts that rate Veeco Instruments a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Veeco Instruments has been 344,900 shares per day over the past 30 days. Veeco Instruments has a market cap of $1.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.08 and a short float of 17% with 19.58 days to cover. Shares are down 18.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Veeco Instruments as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • VECO's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 55.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • VECO's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.68, which clearly demonstrates the ability to cover short-term cash needs.
  • 40.31% is the gross profit margin for VEECO INSTRUMENTS INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -50.11% is in-line with the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 157.7% when compared to the same quarter one year ago, falling from -$22.09 million to -$56.91 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, VEECO INSTRUMENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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